Baltimore officials approved a 9 percent increase in water rates Wednesday as the city auditor revealed that the beleaguered system's billing problems are more extensive than previously known.

City Auditor Robert L. McCarty said a continuing review shows that the Department of Public Works likely owes some of its 410,000 water customers at least $5 million more in refunds due to inaccurate bills. That is in addition to $4.2 million refunded after the auditor's office found widespread billing problems reported in February.

The rate increase will raise the average annual water bill for a family of four from $1,170 to $1,276, public works officials said. The city has raised water rates by 9 percent or more in all but two years since 2000 to pay for repairs. A decade ago, the average family paid $517 annually for city water.

Defending the rate increase, Mayor Stephanie Rawlings-Blake said the city has an aging water system. The additional revenue is needed to replace or repair pipes, protect drinking water reservoirs and upgrade water meters, officials have said.

"We know there is much more work that needs to be done and that work costs money," Rawlings-Blake said. "As mayor I do not have the luxury of passing the buck when faced with tough choices."

Rawlings-Blake and her two appointees to the city's Board of Estimates, Solicitor George A. Nilson and Public Works Director Alfred H. Foxx Jr., voted for the increase. Comptroller Joan M. Pratt voted against the measure, citing concerns about the accuracy of the city's water bills.

"I'm opposed to this when we are charging citizens more than we should. We owe them credits and refunds, but we're asking for an increase," Pratt said.

City Council President Bernard C. "Jack" Young abstained, citing a conflict of interest. He has a family member that works in the water department. "If I could vote no, I would vote no," Young said.

The rate increase goes into effect Thursday.

The Department of Public Works has been grappling with billing problems attributed to faulty water meters, an outdated computer system, human error and, in some neighborhoods, meter readings fabricated by two employees who no longer work for the city.

Rudolph Chow, head of the city's Bureau of Water and Wastewater, said a third party is conducting a quality check of the department's billings. He said it was too soon to determine exactly how much money is still owed in refunds to customers.

McCarty said records indicate the additional refunds likely will be at least $5 million. "It could be higher. We don't have a total number yet," he said.

In May, Chow's office said residents of some neighborhoods had received inaccurate bills because two city workers had made up meter readings. The two were responsible for 29,993 accounts in northeastern and eastern Baltimore and parts of eastern Baltimore County, officials said. They said the fakery appears limited to November and December of 2011.

"We have gone back and done a reread of all of the meters they have touched on," Chow said. "We never want to have circumstances where our folks were making up numbers."

In an interview, Chow said the water bureau has been taking steps to address its problems.

He said when he took over the agency in 2011, the billing system was severely understaffed and lacked leadership — problems magnified by aging and malfunctioning infrastructure, computer glitches, programming mistakes and human error.

"It didn't take me long to realize there were a number of shortcomings," he said.

The agency was behind in reading some 200,000 accounts and was forced to do a mass estimation to catch up, he said.

"We simply did not have the right number of resources of folks actually out there," he said, acknowledging that estimating bills compounded the problems.